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| The Civil Aeronautics Board's (CAB) manifested its displeasure in the union of Zest Airways and Air Asia Philippine which could face penalty for undertaking joint marketing agreement without asking regulator's approval. CAB said both airlines failed to explain why Zest Air is using Air Asia's website for reservation and ticket sales without clearance from them. Both airlines also failed to register the merger with the Board. Merger and consolidation, as well as Joint Marketing Agreement between two airlines requires prior license and approval from CAB to protect the interest of the riding public as to civil and criminal liability in case of breaches of contract that may be incurred by the merging airlines. |
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CAB is an archaic gov't agency that hampers the development of RP's aviation industry. These laws are constricting & inutile.
ReplyDeleteWell, they didn't say no. They just said that the airlines failed to follow the rules which they themselves bound to follow
ReplyDeleteHistory repeats itelf: Seair & Tiger Airways. What can CAB do? In the end it'll still be the Filipinos & Philippine economy reaping the economic gains of this merger so cut the hypocrisy & be realistic. Enough of these myopic laws. Give the flying public to choose the airlines they want to fly. The more, the merrier, the happier because now we have OPTIONS.
ReplyDeleteActually we don't really have MORE OPTIONS, per se because this merger threatens to cut services to many of the smaller towns and provinces. Case in point, Marinduque, Busuanga, Romblon and Masbate.
ReplyDeleteAlso CAB is just trying to protect the interests of the population by ensuring continued services to some domestic links so, no, they are not really archaic because we are not a laissez-faire economy where businessmen like those controlling Air Asia and Zest Air are free to do whatever they want just for the sake of more profits at the expense of the riding public.
If destinations are dropped by an airline, for whatever reason, there'll always another airline who will be more than willing to fill in the void if that airline has the proper equipment to fly\service those routes.
ReplyDeleteHow can CAB "protect the interest" of the public when it restricts mergers? Mergers are done by companies in order to beef up financially, to make it more competitive & expand its operations. I would rather have airlines flying in & out of points A to Z and let them compete. This will lower the airfares & result to improved service. And lastly, profit is a big part of business. That's a fact. Be realistic.
This is misplaced perceptions. CAB is not preventing mergers. Case in point is the Seair merger with Tiger Airways of Singapore. CAB also does not dictate airlines where they should fly. Its the airlines themselves who choose where to fly. And they will fly to destinations where they believe to be profitable. Airline business is not social work. Its not a government enterprise either. FACT.
Delete*I'm the same guy as the 4th post
DeleteFirstly, CAB is not restricting mergers. They are just regulating the industry because if they let just any airline start gobbling up other smaller airlines, we'll all have a possible airline market monopoly/duopoly in our hands which would prevent our market from being competitive. Think about it. If Cebu Pacific had the right to merge with any airline they wish without CAB's approval? Then they would have cornered the Philippine aviation market in just a few years and made it hard for other start-up airlines to compete with it then in the long-term, airline prices would slowly increase because there is no more competition. Profit may be a big part of business and I'm not saying that the airlines operate in the red just to service the public but if there is no regulatory board like the CAB then we'd have, as I said above, an increase in airline prices. Still think my scenario is not possible? Look at the gas companies and their "1-price rollback and 2-price increase" tactic.
So, we need the regulation by the government so that fair competition is maintained. We are not like Europe or the US that have a huge airline market that's why lots of airlines can compete in it and so no regulatory board is required. But even there they need some intervening by the government and I can give dozens of examples of that.
CAB allowed the marketing tie-up of Seair and Tiger. It's just that Philippine carriers file a case to stop it because it violates cabotage. CAB actually does not restricts AirAsia and ZestAir to operate as a merged company. They just have to follow certain rules. These rules are not restrictive. CAB is just doing their jobs to REGULATE things in the aviation industry.
ReplyDeleteCabotage laws are phased out in some EU countries and here we are still practising it! These countries have outstanding aviation industry. Read CAPA insightful analyses of countries not practising this very restrictive cabotage laws. What do you make out of it? This is the 21st century for crying out loud.
ReplyDelete